CHARTS: The coming critical minerals trade war is BRICS short of a load
"While a large number of countries around the world continue to talk about securing raw material supply, China is actually doing something about it."
A recent mining industry conference held in the northern Chinese coastal city of Tianjin has highlighted the concerted effort amongst the country’s miners to snap up gold mines abroad.
Caixin reports that conversations amongst gold mining executives at the recent China Mining Conference were abuzz with the topic of foreign acquisitions, with industry insiders anticipating a sustained rise in bullion prices.
Spearheading the overseas acquisitions drive is Fujian-based gold mining giant Zijin (SEHK:2899), which made its initial foray abroad eight years ago. According to Zijin’s president for international affairs, Li Zhilin, the company currently controls six mines in Russia, Mongolia, Tajikistan and Australia.
Zijin obtained regulatory approval for its takeover of Norton Gold Fields (ASX:NGF), one of Australia’s biggest gold miners, in July, while vice chairman Qiu Xiaohua sees the company investing USD$5 billion in overseas acquisitions during the next several years.
According to Li gold miners consider overseas acquisitions to be the “main path for increasing resource reserves”, as they enable companies to “reach the status of international mining firm.”
China is host to less than 5% of the world’s known gold reserves according to data from the World Gold Council, while domestic mines are often readily exhausted.
China’s robust fiscal health in tandem with the ailing state of many Western economies has provided Chinese companies with a bounty of ripe acquisition opportunities. A senior central government official even recently went to the trouble of encouraging Chinese companies to pursue what he considers to be “rare and historic” opportunities to buy overseas companies.
Other Chinese gold miners currently pursuing major overseas deals include the country’s biggest gold producer China Gold Group, which until recently was in discussions to acquire African Barrick Gold (LSX:ABG), as well as Shandong Gold, which obtained a majority stake in Australia’s Focus Minerals (ASX:FML) just last month.
